Coforge, Persistent outperform mid-tier peers amid slowdown

BENGALURU: Coforge and Persistent Systems continued to post double-digit revenue growth in the Dec quarter, standing out as several engineering-focused mid-tier IT companies saw growth taper or turn negative.

Firms such as Tata Technologies, Cyient, LTTS and Tata Elxsi largely reported slower momentum, with revenue, margins and net profits showing signs of moderation. Coforge reported revenue growth of 21.5% in the Dec quarter, though this was sharply lower than 40.3% in the corresponding period last year. Persistent Systems improved its growth momentum to 17.3% from 14.9% a year earlier. Regulatory filings over the past three Dec quarters point to a brief uptick after 2023-24, followed by a blip this year. "Coforge's growth has been driven by strong BFSI exposure, large deal wins and better offshore leverage. Persistent continues to benefit from product engineering, cloud modernisation and embedded AI work tied to revenue-generating transformation rather than cost takeout. In contrast, Tata Elxsi, Cyient, LTTS and Tata Technologies are seeing pressure due to an auto and industrial slowdown, delayed R&D spends and elongated decision cycles, even though margin discipline remains relatively intact," said Phil Fersht, CEO and chief analyst at HFS Research.

Ray Wang, principal analyst at Constellation Research, attributed the relative outperformance to greater agility and pointed to Coforge's acquisition of Encora as a strategic move to sustain momentum and improve revenue per employee. Persistent has also invested in AI, developing productivity tools such as Sasva and iAura that supported margins despite wage hikes. BNP Paribas noted that AI-driven platform and tooling engagements enabled a margin lift, backing the company's 200-basis-point expansion target by the next financial year. The broader engineering services segment remains under pressure. Tata Technologies reported a 1.5% revenue decline, while Tata Elxsi recorded a sharper 5.5% contraction after posting growth last year.